In a last minute move to avert a mini-financial disaster, yesterday the Senate passed, and the president signed, a bill to extend the NFIP until November 30, 2018. The House had previously passed a companion bill. Demonstrating the broad support to keep the program running, the Senate passed the bill 86-12 and the president signed it within hours.
With the July 31 deadline approaching, on June 28, 2018, the U.S. Senate approved its version of the farm bill, which included an amendment that would have extended the authorization of the NFIP for six months. The House, however, opposed a six-month extension because it would leave the fate of the program up to the 116th Congress. The House Amendment to S. 1182 only extended the program until November 30, 2018, maximizing pressure on Congress to enact a permanent solution that makes necessary reforms and provides certainty for insurance providers and housing markets.
Much has been written about the negative impacts of the expiration of the program. As the Congressional Research Service notes:
“The expiration of the NFIP’s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered.”
Check back here for updates on the future of the program. As we previously reported, the House has passed a series of bills to reauthorization and reform the program. However, the Senate has yet to take any substantive action and the Senate Banking Committee hasn’t introduced a bill on the topic.
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